Slipping again, the Canadian used wholesale market saw a decline in prices of -0.38% for the week ending on May 18, compared to the prior week’s -0.28%.

That is according to Canadian Black Book’s Market Insights report, which also revealed the car segment was down -0.35% (compared to last week’s -0.20%), while truck/SUV segment prices declined -0.40% (compared to the prior period’s -0.35%). One segment saw an increase in values for the week and that was full-size luxury crossovers/SUVs — at +0.15%. 

In the United States, an acceleration in the rate of decline was observed for the overall market last week, with only two segments reporting a decrease in value.

“Although there was some reduction in auction inventory, the volumes being sold by the larger sellers, especially in the OEM lanes, are reminiscent of those seen pre-COVID,” said CBB.

In Canada, the sports car category showed the least of declines with -0.08%, followed by premium sports cars at -0.18%. The most significant decrease came from sub-compact cars at -1.19%, followed by compact cars at -0.90% and mid-size cars at -0.26%.

For trucks/SUVs, the segments that experienced the most notable declines were compact vans (-1.26%), full-size pickups (-0.75%), sub-compact crossovers (-0.74%), and full-size crossovers/SUVs (-0.72%). However, as previously mentioned, one segment was up and that was full-size luxury crossovers/SUVs — at +0.15%.

The average listing price for used vehicles, as per the 14-day moving average, was $33,800. The analysis is based on around 220,000 used vehicles listed for sale on Canadian dealer lots, according to CBB.

The full report is available here

 

Lefko, P., dealer, C. auto, Lefko, P., & dealer, C. auto. (2024, May 22). Used vehicle prices down -0.38%; cars down further this week. Canadian Auto Dealer. https://canadianautodealer.ca/2024/05/used-vehicle-prices-down-0-38-cars-down-further-this-week/

The Road Back to Normality

Highlights

  • Canadian light vehicle sales are expected to grow by 9.6% in 2024 to 1.9 million units, as affordability challenges diminish and population growth bolsters demand.
  • Risks to our forecast are roughly balanced, with elevated population growth offsetting the risks related to moderating economic fundamentals.
  • North American automotive production is expected to grow by 2.9% in 2024, providing further support to supply levels.

Light vehicle sales in the first quarter of 2024 totaled over 391k units, representing a 9.1% increase relative to the same period last year. Car volumes were up 17.4% year-on-year (y/y) in the first quarter, while light truck volumes were up a more modest 7.6% y/y. Light trucks continued to account for more than 80% of light vehicle sales, but the segment’s share has fallen modestly relative to last year as the supply mix rebalances amid rising production and enhanced demand for affordable models.

Despite the numerous economic challenges facing Canadian consumers, demand for automobiles has shown surprising resilience over the past year, with sales growth in 2023 roughly matching that seen in the U.S. This occurred even though the Canadian economy expanded at a pace less than half that seen south of the border last year. This can in part be explained by the binding nature of supply constraints over the past few years, as gradual inventory improvements were matched by pent-up demand in both countries. While this remains the driving factor in 2024 for Canada amid a solid build-up of accumulated consumer savings, elevated population growth has also been boosting sales volumes.

For the year, we expect that vehicle sales in Canada will grow by 9.6% – reaching 1.9 million units – although moderation is expected through the year as the economy slows and the post-pandemic bounce-back recedes gradually. We anticipate that sales will return to the pre-pandemic level next year as the economy recovers and lower interest rates facilitate stronger buying activity.

North American & Canadian Production Rebounding

Chart 1: The chart shows that global supply chain pressures, as measured by the New York Fed's Global Supply Chain Pressure Index, declined steadily throughout 2022 and into 2023 after spiking in 2021. The index shows that supply chain pressures were below the historical average for most of 2023, before rising and returning to normal levels in 2024. The chart also shows that manufacturing delivery times in Canada and the U.S. have mirrored this trend and are now back at their pre-pandemic level.The automotive industry returned to a state of normality in 2023 as easing supply chain issues improved procurement times (Chart 1) and facilitated a rebound in production. As a result, North American light vehicle production increased 9.6% last year, putting total production only 3.9% below 2019 levels. This helped to push inventory levels to their highest level in three years to start 2024.

In Canada, 1.54 million light vehicles were produced last year, representing a 25.7% increase relative to 2022. Although this production level is roughly 18.9% (or 357k units) below the nation’s 2019 production level, most of this decline (~95%) is accounted for by discontinued production of the Chevrolet Equinox at General Motor’s Ingersoll plant and the Dodge Caravan at Stellantis’ Windsor plant. However, both facilities have seen partial offsets from the production of other models.

Looking to 2024, North American automotive production is expected to increase by 2.9% as automakers continue to adjust to the post-pandemic market. Canadian production in contrast is expected to decline, but this is related to the temporary shutdown of the Stellantis Brampton plant and the Ford Oakville plant as the two facilities are upgraded for electric and hybrid vehicle production. Over the coming years, the upgrading of assembly facilities is expected to keep aggregate Canadian auto production output subdued.

Canadian Labor Market Moderately Supportive of Demand

Chart 2: The chart shows the Canadian unemployment rate, in addition to the year-on-year growth rates for the Canadian labor force and employment. Year-on-year employment growth remained around 2% for most of 2023, before decelerating into 2024. Labor force growth in contrast accelerated in mid-2023 and consistently outpaced employment growth, which pushed up the unemployment rate by one percentage-point between March 2023 and March 2024.The Canadian labor market is not quite as weak as is suggested by the one percentage-point increase in the unemployment rate over the past year. With the nation’s population growing by 3.2% last year, we have seen labor force growth outpace employment growth consistently since May 2023 (Chart 2), which has exerted upward pressure on the unemployment rate. Canadian job gains in 2023 actually exceeded those seen in 2019 by more than 100k jobs, but the economy would have needed roughly 160k additional new jobs to offset outsized labor force growth and keep the unemployment rate unchanged relative to the start of 2023. At the same time, while part-time jobs contributed more to last year’s gains than usual (25% vs. 3% in 2019), full-time job growth was above that seen in 2019. So, while the Canadian labor market is not remarkably strong, it is not currently in the doldrums either.

This has contributed to the resilience in real income growth and bolstered the financial situation of households. Real household disposable income was roughly 8.8% higher in the fourth quarter of 2023 relative to the fourth quarter of 2019. However, the household savings rate has remained at an elevated level, suggesting that Canadians are opting to retain a higher share of these gains than they did prior to the pandemic. While there are multiple reasons why this might be, one of the primary drivers is related to shelter costs.

Housing Costs Continue to Have a Strong Influence on the Economy

About 35.5% of Canadian households currently hold a mortgage, and roughly half of them have yet to see their rates renew since the Bank of Canada began to raise interest rates back in early-2022. Precautionary saving is likely elevated among this cohort as interest rates are expected to remain above the pre-pandemic level for the foreseeable future. The other half of mortgage holders, which includes variable rate mortgage holders, have already seen their payments increase, which has pushed up the mortgage debt service ratio to its highest level on record (Charts 3a & 3b). In addition to mortgage holders, many households that rent (which encompass roughly a third of households) have also seen their housing costs rise through elevated rent price growth over the past few years. Renters wishing to own one day are also likely boosting their savings as housing prices remain elevated.

Chart 3a: The chart shows the sixty-month change in the conventional Canadian mortgage rate for a 5-year term between 1990-2024. The chart shows that five-year changes in the five-year mortgage rate were predominantly negative over the thirty-year period from 1990-2019, with the only positive occurrences in the early 1990s, 2006-2007, and 2018-2019. The average five-year change during this period was negative 1.28 percentage points. In the post-pandemic period, the five-year change has risen to and remained near its highest level since 1990. Chart 3b: The chart shows the Canadian mortgage debt service ratio (DSR) for 1990-2024. The mortgage DSR fell from 6-7 at the start of the 1990's to just above 5 by the start of the 2000's. The DSR then trended upward to 6 prior to 2008 and trended sideways thereafter until it began to rise again in 2016 and return to its early 1990's high of 6-7 by 2019. The DSR fell sharply in 2020-2021, but subsequently rose sharply in 2022-2023 and plateaued at a new record above 8 in 2024.

Collectively, roughly two-thirds of Canadian households have either seen their housing costs rise or expect them to rise at some point in the future. While the magnitude of the increase will vary between households, on aggregate this remains a headwind to consumption and by extension vehicle sales. This is particularly saliant in the context of the current automotive market, as affordability challenges remain amid elevated vehicle prices and financing costs. So, the question is, why are sales still trending higher?

Canadian Vehicle Sales Continue to Grow Despite Headwinds

Chart 4: The chart shows the year-on-year change in the consumer price index subcategory for private purchases of passenger vehicles for 2020-2024. This shows that auto price growth trended near 2% in 2020 before spiking to a high above 8% by mid-2022. Price growth then fell quickly through the second half of 2022 and the first half of 2023, returning to 2% by mid-2023. In 2024, year-on-year price growth was near 0% in the most recent data for Mach 2024.The first reason is owing to the delayed post-pandemic recovery in the automotive sector. The lack of available inventory in the market over the past three years has created a build-up of pent-up demand, which is one of the reasons why Canadian vehicle sales growth roughly matched that seen in the U.S. last year despite materially different economic trends. As production ramped up and supply levels gradually improved last year, consumers in both countries pushed sales to their highest level since 2019. This is expected to continue to support sales moving forward, with moderating vehicle prices (Chart 4) and lower financing costs providing support to this channel through the second half of the year.

The second factor pushing up Canadian vehicle sales over the past year has been population growth. Commuting to work via a vehicle is the main method of transportation for all segments of the population, including non-immigrants, immigrants, and non-permanent residents. While non-permanent residents, the largest source of population growth in Canada over the past two years, tend to rely on public transportation for commuting to a greater degree, more than half typically use a vehicle (Chart 5). In 2022, supply constraints and low inventory levels negated the impact this would normally have on sales, but through the second half of 2023 and into 2024 we have seen population growth begin to feed through to demand.

Chart 5: The chart shows the shares of commuting methods for driving, public transit, active transportation, and other, for three categories; non-immigrants, immigrants, and non-permanent residents. Driving is the most common method of transportation for all three categories, although non-permanent residents rely more on public transportation (~33%) than non-immigrants and immigrants (~5-13%). Chart 6: The chart shows annual Canadian motor vehicle sales for 2015-2025, with 2024-2025 being forecasts. Pre-pandemic, auto sales trended around 2 million units per year. Pandemic-related supply chain disruptions pushed annual sales down to 1.6-1.7 million units for 2020-2023, although at 1.74 million units, 2023 sales were the highest they have been since 2019. Looking ahead, we expect sales to rise gradually to a range of 1.9-2.0 million units in 2024-2025.

Looking ahead for 2024, we expect that vehicle sales in Canada will grow by 9.6% to 1.9 million units before moderating to 4.3% in 2025, with healthy inventory levels and lower financing costs improving affordability into the new year (Chart 6). Risks to our forecast are roughly balanced, as population growth may have a stronger feedthrough effect than expected, while at the same time moderating economic growth and the potential for persistent affordability challenges could weigh on sales as well.

Bottom Line

With 1.76 million vehicles sold in Canada last year and inventory levels reaching a three-year high to start 2024, the long-awaited recovery in the automotive market is well underway. Inventory levels are expected to continue to grow in 2024, with supply chain disruptions and union negotiations of prior years soundly in the rear-view mirror. The demand picture on the other hand continues to be nuanced, with economic headwinds, particularly related to the housing sector, running up against the countering influence of elevated population growth. We expect that Canadian vehicle sales will grow by 9.6% this year, before converging with the pre-pandemic level of sales in 2025.

 

Foran, A. (2024, May 13). Canadian Automotive Outlook. The Road Back to Normality. https://economics.td.com/ca-auto-outlook-update?utm_source=TD&utm_medium=Email&utm_campaign=ca-auto-outlook-update

 

As scientists warn that the world needs to transition away from fossil fuels to limit climate change, Canadians are still lukewarm on electric vehicles, according to a survey conducted by Nanos Research for CTV News.

Nanos surveyed 1,086 Canadians between April 28 and May 1 to gauge their level of support for a hypothetical ban on the use of gas-powered cars and SUVs as of 2035, their feelings about green energy incentives, their level of confidence that Canada will have enough charging infrastructure in the future and their level of interest in owning an electric vehicle.

The survey found Canadians were almost four times more likely to oppose, rather than support, a total ban on the use of gas-powered vehicles as of 2035.

“Opposition is higher among residents of Atlantic Canada, the Prairies and British Columbia compared to Quebec,” the study reads.

The results come months after federal Environment Minister Steven Guilbeault finalized new regulations mandating the transition to battery-operated cars, trucks and SUVs.

Automakers will have the next 12 years to phase out combustion engine cars, trucks and SUVs, and to gradually increase the proportion of electric models they manufacture.

The move fulfills a promise the Liberals made in 2021to phase out the sale of gas-powered passenger vehicles by 2035, but it is not a total ban on the use of combustion engine vehicles. Gas-powered models sold before 2035 will be allowed to remain on the roads.

Incentives, infrastructure and ownership

When it comes to green energy incentives, 72 per cent of respondents support or somewhat support incentives for Canadians to use alternative energy sources for home and travel. This figure is consistent with findings from 2023, but remains lower than in 2016. Support is higher in Quebec (81 per cent) and Ontario (72 per cent) than in the Prairies (63 per cent).

Level of confidence in Canada having enough charging infrastructure in the future

Question: Are you confident, somewhat confident, somewhat not confident or not confident we will have enough charging infrastructure in the future to support the increasing number of electric cars?

RDD dual frame hybrid telephone and online random survey, April 28 to May 1, 2024, n=1086, accurate 3.0 percentage points plus or minus, 19 times out of 10
Source: Nanos ResearchCreated with Datawrapper

Enthusiastic as they are about clean energy incentives, Canadians are much less optimistic about the likelihood Canada will have enough charging infrastructure in the future to support the increasing number of electric cars.

In fact, two-thirds of survey respondents, or 66 per cent, are not confident or somewhat not confident Canada will have the necessary infrastructure in place. Once again, Quebecers expressed the most optimism in this area than respondents in other parts of the country.

Level of interest in owning an electric car – Tracking

Question: Are you interested, somewhat interested, somewhat not interested or not interested in owning an electric car?

RDD dual frame hybrid telephone and online random survey, April 28 to May 1, 2024, n=1086, accurate 3.0 percentage points plus or minus, 19 times out of 20
Source: Nanos ResearchCreated with Datawrapper

Finally, fewer survey respondents are interested in owning an electric car now than in 2022 and 2021. Just over half are interested (21 per cent) or somewhat interested (33 per cent), representing an 11-percentage-point decline in outright interest from 2022, when 32 per cent interested.

Quebec residents are more likely to be interested or somewhat interested in owning an electric vehicle than respondents in the Prairies or Atlantic Canada. The study did not state why Canadians’ attitudes toward electric vehicles may have changed.

 

 

Methodology

Nanos conducted an RDD dual frame (land- and cell-lines) hybrid telephone and online random survey of 1,086 Canadians, 18 years of age or older, between April 28 to May 1, 2024 as part of an omnibus survey. Participants were randomly recruited by telephone using live agents and administered a survey online. The sample included both land- and cell-lines across Canada. The results were statistically checked and weighted by age and gender using the latest Census information and the sample is geographically stratified to be representative of Canada.
Individuals randomly called using random digit dialing with a maximum of five call backs. The margin of error for this survey is ±3.0 percentage points, 19 times out of 20. Charts may not add up to 100 due to rounding.
With files from The Canadian Press 

 

DeLaire, M. (2024, May 5). Amid climate change warnings, Canadians lukewarm on Electric Vehicles. CTVNews. https://www.ctvnews.ca/autos/amid-climate-change-warnings-canadians-lukewarm-on-electric-vehicles-1.6873815

 

Just like bananas, ‘there’s some green, some yellow, some brown, and some rotten’ used cars, says Dale Pollak

Used vehicles are too often being priced using irrational, flawed and outdated assumptions that are undermining profit, according to Dale Pollak, a U.S.-based auto retail expert and founder of vAuto.

That’s because prices are usually determined based on how long the vehicle has been sitting on the lot. The temptation is to price everything for maximum margin on day one and then discount if it starts to sit, he said. But that’s a mistake.

“For some reason, we believe that the number of times the sun — a star in the sky — has risen in the east and set in the west over our vehicle somehow is an accurate measurement of that vehicle’s opportunity,” Pollak said during a presentation to a dealer audience Nov. 28 in Toronto. “Calendar does not equal profit potential.”

Instead, he encouraged pricing managers to view used cars as bananas: “There’s some green, some yellow, some brown, and some rotten,” said Pollak, also founder of vAuto, a software tool aimed at helping dealers better manage their new-and used-vehicle inventories to optimize profitability.

Brown and rotting bananas need to be discounted and sold quickly, while yellow and green ones can be priced higher and held onto until the right buyer comes along, he said.

“That is what any rational, prudent businessperson would do with an eye towards optimizing the return on that set of inventory,” said Pollak. “It just happens to be exactly the opposite of what we do with cars.”

He compared two sales that look identical on a balance sheet: A $50,000 car, with a $2,500 margin, sold in 60 days versus a $15,000 vehicle that sold in 20 days with the same margin.

“They are the same two grosses but are they the same two outcomes for your used car business?” he said. “Not one of us would ask the question, ‘Wait a minute. How much did we have to invest and how long did we have to hold that investment to make $2,500?’”

Pollak’s team did a deep dive into data from millions of used vehicle transactions and came up with three key factors that had a significant correlation with return on investment: the vehicle’s cost relative to the market; its supply-demand ratio; and its popularity or retail volume.

The idea, using this approach, is to categorize inventory into four tiers: Platinum, gold, silver, and bronze. Platinum can be priced the most aggressively and held onto, while bronze vehicles should be discounted on day one and sold quickly like a rotten banana, he said.

The data, though, showed many dealerships priced their bronze inventory — the ones with the highest cost, longest market day supply and lowest retail volume — as if they were their most prized assets, he said. Conversely, platinum vehicles — lower costs, high demand and market popularity — were often priced as if they were in distress and needed an urgent sale.

“You’re pricing your highest risk investments essentially not to sell and you’re distress pricing your best cars,” said Pollak. “You’re selling your best cars in a third or half the time, and you’re hanging on to your toughest cars twice as long. Nobody can defend that.”

 

 

HUMBER, T. (2023, November 30). Why an expert told Canadian dealers to price used cars like bananas. AUTOMOTIVE NEWS CANADA. https://canada.autonews.com/retail/why-expert-told-canadian-dealers-price-used-cars-bananas

 

This week, Canadian Black Book’s latest Market Insights update reveals that the used wholesale market experienced a decline in prices of -0.34% for the week ending on April 13 — close to the prior week’s -0.36%, though inching further from the 2017-2019 average of -0.08%.

The car segment fell by -0.38% compared to the previous week’s -0.28%, while truck/SUV segment prices were down 0.30% — less than the prior week’s -0.43%. Two out of 22 segments’ values increased for the week: mid-size luxury crossovers/SUVs (+0.18%) and sports cars (+0.03%).

In the car category, the most significant decline was shown in prestige luxury cars (-1.12%), followed by compact cars (-1.19%). Only one segment showed an increase in pricing and that was sports cars (+0.03%), trailed by premium sports cars (-0.07%) and luxury cars (-0.08%).

For trucks/SUVs, sub-compact crossovers (-0.89%) experienced the largest decline followed by full-size pickups (-0.76%), while compact vans and full-size crossovers/SUVs shared the same decrease (-0.67%). Only one segment had an increase and that was mid-size luxury Crossover/SUV (+0.18%).

The average listing price for used vehicles, as per the 14-day moving average, was approximately $34,500. The analysis is based on around 220,000 used vehicles listed for sale on Canadian dealer lots, according to CBB.

Other updates from CBB include that wholesale sales in Canada were flat month-over-month at $82.2 billion in February 2024. The Canadian dollar hovered around $0.725 on Monday morning, down from $0.735 the prior week. And the overall United States market, although still experiencing growth, is seeing a noticeable deceleration in the pace of these gains.

CBB also said a “growing number of segments are beginning to see a reversal into negative trends.”

The full report is available here.

 

dealer, C. auto, & Lefko, P. (2024, April 17). Used vehicle prices down -0.34%, two segment values up. Canadian Auto Dealer. https://canadianautodealer.ca/2024/04/used-vehicle-prices-down-0-34-two-segment-values-up/

Four years after a global pandemic and lockdowns drove the automotive industry into a brick wall, with major supply chain kinks and withered car lot inventories, things are back to normal, in terms of inventory, according to AutoTrader.

New vehicle inventories in Canada on AutoTrader’s marketplace hit a record high of 168,000 vehicles in February – a 78 per cent year-over- year increase.

Used vehicle inventory is also up, with 202,521 used vehicles on the market in February.

“Dealership lots are currently packed with used vehicle inventory, as the influx of new vehicle availability is contributing to higher volumes of pre-owned vehicles,” AutoTrader says in its latest marketplace report.

“With significant signs of inventory recovery – in some cases, the highest levels recorded since the pandemic – and record price drops, the data suggests now is the closest to a buyer’s market we’ve seen in years.”

In the early days of the pandemic, there were supply chain interruptions and auto makers cut back on production, thinking vehicle sales would plummet. But demand for new cars actually remained strong. As new car inventories shrank, prices rose, and car dealers scrambled to fill demand with used cars.

Now there’s a bit of a glut of used cars for sale, so prices are coming down.

“In January 2024, AutoTrader’s pricing data revealed record-breaking decreases across used inventory pricing, with 35 per cent of used vehicles seeing a drop in pricing – the first in marketplace history,” AutoTrader says.

According to the most recent data from Statistics Canada, there were 128,193 cars and trucks sold in Canada in December 2023, which was higher than the pre-pandemic number of 116,466 in December 2019.

As of February, the average price for a new vehicle in Canada was $66,979 and a used vehicle $38,451.

In B.C., the average used car price in B.C. was $43,946 in June 2023, said Baris Akyurek, vice-president of insights and intelligence for AutoTrader.

In February, the average price for used vehicles in B.C. came down to $41,811, he said. He added the higher average price for used vehicles in B.C., compared with the rest of Canada, may be attributed to the fact that, in B.C., there tend to be more EV sales, and EVs tend to be more costly than conventional vehicles.

One recent trend in new vehicle inventories is the increase in electric vehicles. Whereas there were only 2,409 EVs listed on the AutoTrader site Canada-wide in 2023, there were 13,573 listed last week. In B.C., there were only 481 new EVs listed last year. Today, there are 4,114.

Akyurek attributes this increase to the fact there are simply more EV models available.

“In 2023, there were around 60 EV models that were being manufactured, and the expectation is by the end of 2024 there will be 145 different make and models,” he said.

However, AutoTrader surveys suggest that some Canadians may no longer be as keen to buy an EV as they were a couple of years ago.

In March 2022, an AutoTrader survey on buyer intentions found 68 per cent of respondents said they would consider an EV for their next car. In March 2023, that fell to 58 per cent.

Akyurek notes that in March 2022, gasoline prices had skyrocketed, as a result of Russia’s invasion of Ukraine and subsequent spiking oil prices. Whenever gas prices spike, interest in EVs go up.

“There is a direct correlation to between what happens to gas prices and EV interests,” Akyurek said.

“EVs are still selling, but are they selling as fast as the supply? No.”

 

Bennett, N. (2024, March 13). New vehicle inventories in Canada at record high: Autotrader. Business in Vancouver. https://www.biv.com/news/economy-law-politics/new-vehicle-inventories-in-canada-at-record-high-autotrader-8441291

 

Due to supply constraints and high demand, prices for vehicles skyrocketed during the pandemic. Now, they’re starting to come down

Unsold 2024 Mustang Mach-E electric vehicles sit at a Ford dealership, Jan. 21, 2024, in Broomfield, Colo. As vehicle inventory and manufacturing catches up to consumer to demand, vehicle prices are beginning to drop. PHOTO BY DAVID ZALUBOWSKI /THE ASSOCIATED PRESS

 

The COVID-19 pandemic hit many industries with supply issues, including the car industry. The pandemic, combined with an increased demand for personal vehicles due to concerns with public transit and an increased desire to travel locally, triggered a large spike in prices for new and used cars across Canada. While car prices are still significantly higher now than pre-pandemic, they are expected to continue dropping.

“With supply chain disruptions easing up, we’re started to see new car manufacturing improving and new cars starting to come into the market,” said Baris Akyurek, vice president of insights and intelligence at AutoTrader.ca. “We estimated that between 2020 and 2023, 1.5 million fewer new cars were sold. Now that new cars are coming back, they’re selling really well. Last year saw an 11.8 per cent year-over-year increase (in car sales). The first two months of 2024 have been pretty strong as well.”

The high-cost of new vehicles raised the cost of vehicles on the used market as well, as people were holding onto their old cars for much longer. However, according to Akyurek the influx of new vehicles has significantly impacted the used car market. According to AutoTrader.ca data, 50 per cent of people buying new cars will trade in their old vehicle. So, as new car sales rise, the used-car market sees a steady stream of cars, driving those prices down too.

“In February 2024, the average price of a used car is now $38,451,” Akyurek said. “On a year-over-year basis, that’s down 2.1 per cent.”

This graph from AutoTrader.ca shows the increase in car inventory from February 2020-February 2024. According to the Canadian online car marketplace, the increase in inventory has brought the price of vehicles down. (Graph courtesy of AutoTrader.ca) PHOTO BY AUTOTRADER.CA /AutoTrader.ca

 

Despite the drop in prices for both new and used vehicles, they are still significantly higher than in 2019. Akyurek said that in February 2019  the average price for a new car was $45,255 while used was $26,331. In February 2024, the average cost for a new car is almost 50 per cent higher at $66,979 with used cars also much costlier at $38,451.

“The prices are still coming down, but having said that, one of the questions I receive pretty frequently is ‘What’s going to happen to car prices?’” Akyurek said. “I don’t want to speculate, but given the increase in overall demand since the beginning of the pandemic… We don’t expect to see prices to go back to pre-COVID levels anytime soon.”

According to Adam Tietz, a sales consultant at Don Valley Volkswagen in Toronto, his dealership did not have as much of a shortage of vehicles compared to other brands. Still, the overall lack of inventory meant consumers had less room to negotiate prices with dealers, especially for cars in high demand.

“Basically, you were going to pay what the car is priced at, the sticker price,” said Tietz. “Now, since a lot of dealers have (more inventory), there’s more discounts and negotiations.”

Tietz said that some vehicles could have wait times of up to two years, with the Toyota Sienna being an example. The Sienna has forum pages dedicated to it online, where Canadians share how long they had to wait to receive their vehicle, many of them waiting 11 months or longer.

“When you need a car, you need a car,” said Tietz, “You’re sort of at the mercy of the market. If you can wait it out, that’s great… Even me, I needed a car in the summer and the market was its peak. Sometimes you just need one.”

For those looking to pick up a new vehicle, Akyurek said that, on a micro level, different brands of vehicles can have significantly different prices depending on the market.

“The most important thing is doing your research and understanding the market,” Akyurek said. “Going back to inventory availability, for example, we talked about (how) new cars are coming back to the market, but if you segmented that data, European brands and domestic brands’ availability are much better compared to Asian brands.

“Once you find the vehicle you need, I suggest you pull the trigger right away,” Akyurek said. “Because, depending on what you’re looking for, the next time you want to inquire about that vehicle, it might not be there.”

 

Casemore, J. (2024, March 8). Vehicle prices continue to drop following influx of car inventory, … National Post. https://nationalpost.com/news/canada/car-market-price-drop

In working with friends and colleagues at the Used Car Dealers Association, DesRosiers Automotive Consultants reached out to the Canadian used vehicle dealer community and discovered that there are major dynamics at play as the market shifts.

More than 400 UCDA members responded to DAC’s survey, both independent dealers and the used vehicle arm of franchised new vehicle dealers. They offered their view on the used vehicle market in 2023, along with their expectations for the current year.

“With a resurgent new vehicle market, the outlook for the used vehicle sector will be fascinating to watch,” said Andrew King, Managing Partner at DAC, in a statement. “While some consumers are turning their attention back to the new vehicle market, there will be a shortage of recent model year used vehicles for the next few years as off-lease numbers plummet.”

King also said that increases in new vehicle prices, ZEV mandates, and financing shifts all point to the used vehicle market as being “highly dynamic in 2024 and beyond.”

For current year sales expectations, franchised new vehicle dealers and independent used vehicle dealers seem optimistic. On average, they expect to see growth from 203 to 224 units. Among franchised new dealers, sales are expected to rise from an average of 311 units to 341. And sales among independent used dealers are anticipated to grow from 160 to 177 units.

However, when DAC asked dealers about supply and the sourcing of vehicles over the past six months, which they described as “a major point of concern in recent years,” they said respondents were split. Forty-three-point-three per cent of independent used vehicle dealers see the situation as worsening. And 37.3% of franchised new vehicle dealers see it improving.

 

 

dealer, C. auto, Lefko, P., & MacDonald, S. (2024, March 1). Key dynamics at play as used vehicle market shifts. Canadian Auto Dealer. https://canadianautodealer.ca/2024/03/key-dynamics-at-play-as-used-vehicle-market-shifts/

 

Canada’s used wholesale market saw prices decline -0.42% for the week ending on Feb. 3 which, like last week, is not overly far (in comparison to some of 2023’s price declines) from the prior week’s -0.63%. And the 2017-2019 average of the same week was -0.28%, according to Canadian Black Book.

“The Canadian market continued to decrease, with declines closer to the historical average than the last few weeks,” said CBB in its Market Insights update. “Supply is building with decreasing demand for vehicles at auction on both sides of the border.”

The car segment fell by -0.52% compared to the prior week’s -0.76%. And truck/SUV segment prices were down -0.32% compared to the previous period’s -0.46%. Two out of 22 segments’ values were up for the week: sub-compact luxury crossovers (+0.21%) and compact vans (+0.10%).

In the United States, the overall car and truck segments declined -0.33% last week — same as the prior week’s decrease. The volume-weighted car segments fell -0.22%, compared to the previous -0.26% decline. And trucks were down -0.38%; versus the prior week’s -0.36%.

In Canada, the segments in the car category that experienced the least decreases were premium sports cars (-0.09%) and luxury cars (-0.12%). The most significant decline came from sub-compact cars (-1.25%) and compact cars (-1.07%).

For trucks/SUVs, full-size crossovers/SUVs (-0.50%), compact crossovers/SUVs (-0.47%) and full-size pickups (-0.46%) managed the largest declines. However, two segments had increases: sub-compact luxury crossovers (+0.21%) and compact vans (+0.10%).

The average listing price for used vehicles, as the 14-day moving average, was approximately $37,000. The analysis is based on around 220,000 used vehicles listed for sale on Canadian dealer lots, according to CBB.

The full report is available here.

 

 

Phillips, T., dealer, C. auto, & Lefko, P. (2024, February 7). Used vehicle market price declines inch closer to historical average. Canadian Auto Dealer. https://canadianautodealer.ca/2024/02/used-vehicle-market-price-declines-inch-closer-to-historical-average/

 

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Just fill up our application online. Visit our website. Select “Apply Now”. At the bottom of the application you will find a section to upload your bill of sale, drivers license for your customer or any piece of paperwork that you like to send us.

                   

 

If you prefer to send us a paper application you can print one in the button below and send it to us by email, fax, document submission webpage or Company WhatsApp (437-345-4477)

 

 

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Our licensed finance agents will set an appointment with your customer. We meet with your clients at their own time and their preferred location.

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Don’t hesitate to contact us with your questions or any other information that you will need. 

Office: (647) 499-1421

Fax: 1 (844) 800-8787 

Phone/Fax: (647) 352-5422 

Email: info@on-u.org

WhatsApp: 437-345-4477